Brussels, 21/03/2014 (Agence Europe) - At the European summit of heads of state on Thursday 20 March, Luxembourg was given sufficient guarantees for it to drop its veto on the revised EU savings tax directive, which it had been vetoing (along with Austria). The draft rules extend the automatic exchange of bank information between tax offices in the EU to accounts held by trust funds and foundations. The draft directive will be adopted at the next meeting of the EU Council of Ministers, the Agriculture and Fisheries Council, on Monday 24 March.
Before lifting their veto, the two countries demanded a level playing field with five European tax havens (Switzerland, Liechtenstein, Monaco, Andorra and San Marino). The European Commission is currently in talks to revise the EU tax agreements with all five countries. The prime minister of Luxembourg, Xavier Bettel, said they had agreed on a text that gives the European Commission an important negotiating mandate. The summit's final conclusions document states that the Commission will conclude negotiations by the end of the year and submit a progress report to European leaders at their summit in December. If progress is deemed insufficient, the conclusions document says the Commission will explore “options to ensure compliance with the new global standard” for the automatic exchange of bank information, drawn up by the OECD.
Initially, the Commission document noted that if insufficient progress were made, then the Commission would be mandated to explore “measures” that could be taken vis-à-vis non-EU countries. Anxious not to appear threatening, the Commission applied pressure for a more diplomatic tone to be used and the second draft of the conclusions talked about “options to promote respect” of the new rules - a change in terminology that Luxembourg was not happy with. A final version of the text has been approved. Bettel explained that it talked about measures to encourage the five countries to move in the direction of the new OECD standard. The exact nature of these measures is purely speculative and was not even discussed, because the five countries are felt to desire a positive outcome.
In order to reassure Austria and Luxembourg, which feared a plethora of different rules, the summit “invites the Council to ensure that, with the adoption of the directive on administrative cooperation by the end of 2014, EU law is fully aligned with the new global standard”.
Bettel said he wanted transparency in banking. While the German chancellor, Angela Merkel, welcomed the “breakthrough” that had been possible through the more flexible approach of the new government of Luxembourg, Bettel played the good sportsman and said the decision was part of a process that had begun back in April under the previous government, headed back then by Jean-Claude Juncker. The president of the European Council, Herman Van Rompuy, said banking secrecy had been “sent to die”. (EL and MD)